Canadian sanctions guidance — Financial sector

This guide is designed to help Canadian financial institutions, such as banks, institutional investors, investment companies, insurance companies and government agencies understand sanctions compliance and to manage sanctions risks. This information is not exhaustive. It is recommended that each institution ensure they have a sanctions compliance program in place and review new measures on an ongoing basis. Consult with private legal counsel, as required. For information on Canada’s sanctions regime see Canadian sanctions. Additional resources can be found under thematic guidance.

On this page

• Overview
• Due diligence
• FINTRAC and sanctions enforcement
• Red flags
• Enforcement
• Contact

Overview

When sanctions are implemented in Canada, Canadians abroad, and those in Canada, can face limitations in their transactions and activities with sanctioned countries, or listed individuals, and entities.

Financial sanctions prohibit persons in Canada and Canadians outside Canada from providing financial services or conducting financial transactions with, or on behalf of, or at the direction of, listed individuals or entities, or in relation to certain prohibited goods. They may also prohibit specific types of financial transactions with listed individuals or entities, collectively referred to as “persons” under sanctions legislation.

Due diligence

Some individuals and entities may attempt to circumvent Canada’s sanctions, through intermediaries, investments or transactions. Canada encourages the effective and robust enforcement of sanctions through rigorous due diligence, which can help assess whether an activity may trigger sanctions or if an activity is an attempt to circumvent Canada’s sanctions. The compliance program implementation guide contains general due diligence best practices.

As Canada’s sanctions change frequently, it is recommend that you subscribe to receive sanctions updates and monitor the latest announcements on Canada’s sanctions, including new additions to the sanctions lists and sanctions regulations.

There are some key considerations when evaluating transactions in the financial sector:

Transacting with listed persons

Screen any proposed engagement against the UN Security Council Consolidated List and the Consolidated Canadian Autonomous Sanctions List to determine if the individual or entity you propose to engage with is directly subject to Canadian sanctions. Some regulations include foreign financial institutions as listed entities which can have a serious impact on the ability of persons in Canada or Canadians outside Canada to transfer funds or carry out other financial transactions involving those institutions.

While it is generally prohibited to deal directly with listed persons, indirect dealings are an important consideration. Under most Regulations made pursuant to the Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act, it is prohibited to enter into or facilitate a transaction related to a dealing with a listed person – even indirectly, such as through a third party – including if that third party is not Canadian and/or is located outside of Canada. See Dealings prohibition and asset freeze for more information.

Questions to consider:

• Are there any indirect associations between my client and listed persons, for example any indirect dealings with a listed person through associates, family members, subsidiaries, parent/holding company, intermediary bank, legal representatives, among others?
• Does my client have connections of concern, such as a history of engagement with legal entities or arrangements that may have a link to listed individuals, entities, elites, government officials, and/or their proxies?
• Does the activity involve, or benefit, any listed person?
• Am I inviting, or is my client inviting, a person from a sanctioned country to Canada (or to a third location)?
• Am I making or receiving a payment to or from a person (either directly or indirectly), or through a bank, in a sanctioned country?
• Am I in any way facilitating a sanctions contravention?

Financial or related services prohibitions

Review Canada’s sanctions legislation and the relevant regulations to determine if the proposed activity is permitted.

Prohibition on providing financial or related services to listed persons

• Individuals and entities in Canada and all Canadian individuals or entities abroad are prohibited from providing or acquiring financial or related services to or for the benefit of listed persons.
• This prohibition may apply to a wide variety of transactions, including but not limited to banking services, foreign investments, acquisitions, wire transfers, letters of credit, insurance services, or tax, accounting and managements services.

Other financial prohibitions

• Financial prohibitions can be imposed under the United Nations Act, the Special Economic Measures Actor the Justice for Victims of Corrupt Foreign Officials Act.
  • It is important to review the regulations related to your proposed activity to understand any financial or related service prohibitions that may apply.
• For example, Sections 3.01(1) and 3.01(1.1) of the SEMA Russia Regulations prohibit new debt financing, among other prohibitions. Section 5(4) of the SEMA Libya Regulations prohibit certain financial services related to the sale, supply manufacture, transfer, maintenance or use of any arms or related materials.

Exceptions

• Regulations may contain exceptions to allow transactions related to humanitarian aid; transactions required to move financial assets away from listed persons; financial transactions required under pre-existing contracts; and remittances between family members.
• Consult the specific exemptions listed in the relevant regulations.

Cryptocurrency exchanges

In terms of cryptocurrency exchanges, you may wish to consider additional risk mitigation strategies such as:

• Pre-transaction wallet or client screening
• Post-transaction screening to determine the ultimate destination of the funds
• Screen for high-risk wallets that are being advertised in fundraising efforts of listed entities. This could include designated terrorist groups or other listed entities related to military efforts (such as the Russian military)
• Screen for wallets’ links with illicit finance such as ransomware or cybercrime operations

FINTRAC and sanctions enforcement

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) analyzes disclosures on sanctions evasion, in addition to money laundering and terrorism financing.

FINTRAC enforces the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and is also responsible for collecting sanctions‑related information from reporting entities like financial institutions. These obligations help enforcement agencies to build linkages such as mapping indirect associations between suspicious transactions and money laundering, as well as detecting sanctions evasion tactics.

Obligations under the PCMLTFA and Canada’s 3 pieces of sanctions legislation may all be applicable for Canadian financial entities. A situation involving suspected financial crimes such as money laundering may also be related to sanctions. For example, a listed individual or entity might attempt to invest in Canada, concealing their ownership through complex corporate structure or proxies, to circumvent sanctions while simultaneously laundering money.

Similarly, an individual may be both a foreign politically exposed person (PEP) under the PCMLTFA and be listed on the UN Security Council Consolidated List and the Consolidated Canadian Autonomous Sanctions List. However, not all foreign PEPs are listed individuals under sanctions, and not all listed individuals under sanctions are PEPs.

Sanctions‑related reporting obligations to FINTRAC

1. Suspicious Transaction Report (STR)
   • Since August 2024, under the PCMLTFA, reporting entities must report suspected sanctions evasion-related transactions.
2. Listed Person or Entity Property Report
   • Since March 2, 2025, reporting entities must report the existence of property in their possession or control that is owned, held, or controlled by or on behalf of individuals and entities listed under the United Nations Act (UNA).
   • Since October 1, 2025, reporting entities must report the existence of property in their possession or control that is owned, held, or controlled by or on behalf of individuals and entities listed under the Special Economic Measures Act (SEMA) and the Justice for Victims of Corrupt Foreign Officials Act (JVCFOA).

A transaction or attempted transaction does not have to occur to fill a Listed Person or Entity Property report, unlike a Suspicious Transaction Report (STR).

Scenarios

Scenario 1: Foreign account holder A is not a listed individual, but the Canadian financial institution B receives transfers from A’s financial institution C, which is listed.

In such circumstances, the transferred funds are at some point in the possession, custody, or control of the facilitating banks, B and C, as part of the financial service they provide. To the extent that this results in the funds being owned, held or controlled by C the transfer of funds would be contrary to the dealings prohibition.

Similarly, when dealing with the payments chain or transfers of funds, particularly in the case of international transfers, it is common for an intermediary bank (or banks) to be involved in a transaction. Additionally, it is important to note that often the transfer of the funds and the receipt of the associated payment message setting out the transfer details (e.g. name of sender) may not occur at the same time. Therefore, the funds could be received by a facilitating institution before the payment message arrives indicating that the funds come from a listed person. In such an instance the intermediate financial institution facilitating the transaction between clients would be deemed to have taken possession of the funds, and the funds would be subject to the dealings prohibitions.

Scenario 2: Canadian financial institution E receives transfers from financial institution F that is not listed, but the sender account holder G, a customer of F, is a listed person.

In the case of a transfer of funds between two non-listed financial institutions, where the sender account holder is listed, the transferred funds would at some point in the transaction be considered the property of G. Dealing in the property of a listed person is prohibited.

Scenario 3: Canadian financial institution H sends transfers to financial institution I that is not listed, but recipient account holder J is a listed person.

In the case of a transfer of funds to a non-listed financial institution where the account holder is listed, the funds transfer would be considered a financial service to or for the benefit of a listed person, given that the recipient account holder would receive a financial benefit from the transaction.

Scenario 4: Canadian financial institution K holds stock in foreign bank L that subsequently becomes listed.

The dealings prohibitions are broad and designed to capture a variety of transactions that would deal in the property of a listed entity and could include the acquisition and sale of equities or shares. As such, each case would need to take into consideration the nature of the transactions and the relationship of the shareholder to the listed institution.

Red flags

Some individuals and entities may attempt to circumvent Canada’s sanctions through financial transactions. The sanctions due diligence red flags page may be helpful in detecting suspicious transactions. If a transaction raises one or more red flags, there may be a risk of sanctions circumvention or violation. In this case, investigate further and seek legal advice to confirm if the transaction is permissible according to Canada’s sanctions legislation and regulations.

For complementary red flags indicating unusual or suspicious transactions, consult:

• Special Bulletin on financial activity associated with suspected sanctions evasion
• Money laundering and terrorist financing indicators—Financial entities

Any suspect sanctions evasion should be reported to the RCMP.

Enforcement

For information on reporting sanctions violations and on penalties for contravening sanctions, see Sanctions compliance and enforcement in Canada.

Contact

For any sanctions inquiries or questions, contact the Global Affairs Canada Sanctions Bureau.